The forex markets are relatively steady today as with mildly weakness seen in commodity currencies. In particular, Canadian dollar pares back some of this week's gain as WTI crude oil fails to sustain above 50 handle after breaching it briefly. Dollar continues to consolidate but the retreat is shallow so far. Fed officials continued to lay the groundwork for a rate hike in near term. Fed governor Jerome Power said yesterday that the economy was on a "solid footing" and "there are good reasons to think that underlying growth is stronger than these recent readings suggest". Also "if incoming data support these expectations, I would see it as appropriate to continue to gradually raise the federal funds rate."
Fed chair Janet Yellen's speech at Harvard University's Radcliffe day will be the main focus today. Yellen will be joined by former Fed chair Ben Bernanke for a talk on interest rates. US will release Q1 GDP revision and growth is expected to be revised up from 0.5% annualized to 0.9% annualized. U of Michigan consumer sentiment revision will also be featured. Currently, fed fund futures are pricing in 26% chance of June hike and 56% chance of July hike. It's believed that next week's May non-farm payroll report is crucial for the decision.
In Japan, national CPI core was unchanged at -0.3% yoy in April, inline with consensus. Tokyo CPI core dropped to -0.5% yoy in May, below expectation of -0.4% yoy. The data casts much doubt on whether BoJ is on track to achieve the inflation target even with the current stimulus program. Some analysts also noted that both the economy and prices remain weak and prime minister Shinzo Abe could be prompted to delay a scheduled sales tax hike next year.